By  |  March 17, 2010 | 

Mike Radzienda writes…

Last month I read The Commonwealth Fund Report on Global Payment Potential. If you have not read it, you should.  With unwavering certitude, the sixteen current and former healthcare system and health insurance executives interviewed for this report agreed that the global payment model for healthcare services will manifest this decade. In other words, capitation will be back and better than ever.

Regardless of what happens on the Hill this week, the real meat and potatoes of healthcare reform will come down to this type of payment reform.  CMS will force the hand of hospitals and providers to show value, lest fail.  Commercial payers will follow suit. Value based purchasing models at the state level will drive market competition among providers and the public reporting of quality metrics will shape community perceptions in local markets. Hospitals with robust QI infrastructure and data management systems will thrive, but those with cutting edge public relations and marketing departments may succeed as well if their “brand” is solid.

So how will hospitalists fare in this climate?

Well, close your eyes and imagine a world where hospital CEOs want to keep their medicine beds empty; where ED physicians will be incentivized to discharge patients home. MS-DRG payments will be divvied up between hospitals and physicians…the more docs on the case, the smaller the piece of the pie for each.  In this world, the private practice business model falls apart. No more inpatient E/M codes.  All physician services payments are negotiated through service agreements or physicians are employed by hospitals outright. Gain sharing becomes the model for advancing the quality agenda (a long needed reform) and for achieving bonus compensation.

If you are not nauseated right now, then you are probably a hospital employed hospitalist or in a large private practice that is well aligned with your hospital’s C-suite. If you are feeling queasy, get some compazine as I quote the report:

“Provider consolidation will likely occur with broader use of global payment, with both positive and negative consequences….under global payment , services that were profit centers instantly become cost centers…up to 30% reductions in needed hospital capacity were predicted…BETTER MANAGEMENT OF PATIENT CARE IS EXPECTED TO GENERATE A SURPLUS OF HOSPITALS AND SPECIALISTS THAT WILL NEED TO BE REDEPLOYED.”

Regardless of their employment model, I believe hospitalists will fare well under global payment. We may finally be viewed as the “bricks” in the hospital staff edifice as opposed to the “mortar.” Hospital medicine programs that have shown value will be at the table. Physicians dedicated to traditional profit centers (GI lab, Cath Lab, OR) may need to remobilize their axioms.  There will still be sick patients in the global payment world and hospitalists will be the providers privileged enough to care for them.

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